Kemper(KMPR)2023-10-31 02:04Financial Data and Key Metrics Changes - The company reported a net loss of 0.44. This included a non-cash charge of 78 million [6][9][10] - Net investment income for the quarter was 15 million for the third quarter, showing improved profitability compared to the prior year [17] Market Data and Key Metrics Changes - The company noted that the California personal auto rate increase of 30 points, effective in August, had a marginal earned impact in the third quarter but is expected to significantly increase in the following quarters [16][18] - The company is observing hard market conditions, particularly in California, which is contributing to favorable premium retention [12] Company Strategy and Development Direction - The company is focused on returning to profitability and maximizing long-term shareholder value, reaffirming its 2024 financial guidance of achieving a return on equity (ROE) of 10% or greater [5][18] - Strategic initiatives are on track to be completed on time, with expected financial and operational benefits, including the Bermuda project which is anticipated to provide 250 million in life dividends to the parent in the fourth quarter [8][9][80] Management's Comments on Operating Environment and Future Outlook - Management described the current environment as the most dynamic and volatile in the personal auto insurance industry, with expectations that this will persist for at least another year or two [5][18] - The company remains optimistic about future prospects, with confidence in achieving target profitability in 2024 [18][81] Other Important Information - The company is in the process of winding down its preferred P&C business, which is expected to release approximately 175 million of capital by the end of 2024 [80] - The reciprocal exchange has received necessary approvals and began writing business during the quarter, with plans to reinsure select new business from Kemper legal entities [78][80] Q&A Session Summary Question: Decline in policy count in specialty book - Management indicated that the decline is largely driven by a reduction in new business policies, while retention rates remain stable or slightly improved [20][21] Question: Concerns about parent company liquidity - Management acknowledged a decrease in parent company liquidity from 821 million, but expects to bolster liquidity by at least $250 million in the fourth quarter from Bermuda Optimization [31][33] Question: Adverse reserve development in personal auto business - Management expressed confidence in current reserves, noting that adverse development was primarily related to claims from the second half of 2022 and that they are closely monitoring trends [35][44] Question: Impact of capital situation on reciprocal - Management clarified that reinsuring business into the reciprocal would provide capital relief for the parent company, allowing for flexibility in capital management [47][52] Question: Target profitability and ROE expectations - Management reiterated the target of achieving a 10% ROE in 2024, emphasizing that combined ratios are expected to improve as new business is selectively written [54][70]